Aspen (c91) News

MANSIONS AND MORTGAGES

Colorado’s Housing Market Splits Three Ways

By Headwaters News, 1-04-07

It's not easy being Colorado's housing market these days. The record number of foreclosures in the state, particularly in the Denver area, has given it a bad rap. And some say that foreclosure flap has even affected the sale of luxury homes in the hills above Denver and Boulder.

But Colorado's housing market is more than just foreclosures. Yes, home sales for the generally middle class in Colorado are awash in such foreclosure problems right now, enough so in fact that the state Legislature is looking at ways to help, but other housing markets in the state are doing just fine.

Both the Denver Post and the Aspen Times report that home sales in Pitkin County, home of Aspen and Snowmass, were up 19 percent in 2006 to a total of $2.69 billion. The average price for a single-family home in Aspen hit $5.44 million in 2006, up more than $1 million from 2005. Buyers are generally wealthy and from out-of-state, and space for building is limited, say officials.

Also in Pitkin County, officials report that so-called "worker housing" or affordable housing sales hit $21.6 million in 2006, the highest it's been in at least five years. Granted, it's just a mere fraction of the "regular" housing market in Pitkin County, but this housing market is much different.

Worker or affordable housing is generally subsidized by state, federal or other funding sources, and doesn't operate in the same kind of market. Prices are capped, appreciation is limited and the number of units for sale is based on how many openings there are in the system. Buyers have to apply and qualify, and units generally aren't available as second homes or investment properties.

As written in the Aspen Times: "Four three-bedroom, two-bath units [at the Little Ajax housing project were] priced at $199,000, each attracted 40 prospective buyers who competed in lottery for a chance to buy one of the condos. Another nine three-bedroom, two-bathroom condos in the complex, priced at $293,000, each attracted 29 lottery
participants."

Such a system helps those with limited incomes purchase a place of their own, but getting into one isn't easy, given the limited supply and the numerous qualifications. But the lure of owning has pushed many people to sign mortgages that aren't as friendly. And that's where the foreclosure problem begins.

Democrats and Republicans in the Colorado Legislature are looking at bills to address the problem, and many are focusing on the culture of lending: Who is appraising homes and who is offering what kind of mortgages?

The articles say nothing of foreclosure or other botched financial obligations associated with the worker housing projects. So maybe another avenue for lawmakers is to find ways to add more worker housing projects, to lessen the demand for the mortgages that got so many people into trouble in the first place.

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